Figure 4-9 Figure 4-9 shows a market with a negative externality.
-Refer to Figure 4-9.The deadweight loss due to the externality is represented by the area
A)abc.
B)abf.
C)abd.
D)ade.

Question

Figure 4-9  Figure 4-9 shows a market with a negative externality.
-Refer to Figure 4-9.The deadweight loss due to the externality is represented by the area
A)abc. 
B)abf. 
C)abd. 
D)ade.

Quizplus · Accepted Answer

The deadweight loss due to the externality is the triangle formed by the vertical distance between the social cost curve and the demand curve, and the horizontal distance between the quantity where the social cost curve intersects the horizontal axis and the quantity where the demand curve intersects the horizontal axis. This triangle is represented by area abf. Therefore, the correct answer is choice letter B.

Figure 4-9 Figure 4-9 Shows a Market with a Negative